Young Plan

They say that a person who has the grit and gumption and the mental strength, rises from the ashes. That is what a Phoenix is known for, even after being down and out, it rose from the dead. Modern history has a lot of instances where common people and nations have risen from the dead after experiencing an absolute battering and destruction. World War 1 was such time when Germany was down in the dumps and then came back with a vengeance in World War II. It is another story that Germany was completely devastated then. Coming back to World War I, post that, Germany was humiliatingly forced to make payments and transfers of property as well as equipment according to the Treaty of Versailles. A plan for settlement of these reparations, debts was devised in 1929, by a committee led by Owen Young. This came to be known as the Young Plan. A low down on the same is coming up.

What Was the Young Plan?

The precursor to the Young Plan was the Dawes Plan, which was a lukewarm attempt to deal with the large-scale economic depression, massive inflation and unemployment. This too was an effect of the Treaty of Versailles and the reparations imposed under it. Simply put, the Young Plan proposed a reduction in the reparations imposed on Germany. What exactly happened was that it was pretty evident after the state Germany was in that it couldn't cope with the payments post the Dawes Plan. Thus a committee was formed, by Allied reparations Committee, led by Owen Young and JP Morgan Jr.,a prominent banker then, representing USA. This committee submitted its first report on reparations in June 1929. That plan was objected vociferously by the UK. Hence the plan was reworked and finalized in August 31. In a Hague Conference in January 1930, the plan was finally adopted. You can check out more about Treaty of Versailles in Treaty of Versailles summary.

The following suggestions and recommendations were made under this plan.

• This plan decreased the payments for Germany to 112 billion gold marks, (US $8 billion in 1929 and US$ 103 billion in 2011) over a period of 59 years (1988), a step further of the Dawes Plan.
• It divided the annual payment, too, which was set at two billion gold marks, that is US $473 million, in two components - unconditional part equal to one third of the sum and a postponable portion for the remaining two-thirds of the amount.
• the total amount due was set at $26.36 billion or 121 billion Reichsmarks, payable over a term of 58 and a half years.
• In Germany new tax programs were to be introduced as a means to generate revenue.
• A bank for international settlements was to be set up for collecting and disbursing reparations payments.
• Any form of Allied control over the German economy was to be taken off.
• It was agreed (off the record) among the delegates that these provisions would be ineffective till the US government approved the cancellation of war debts owed by the Allied governments.

The words and the complicated figures apart, it will be easy to just remember that the Young Plan reduced a huge amount from the already huge amount of reparations to be paid by Germany.

The Aftermath of the Young Plan

The plan was received with a fierce opposition, especially from certain parts of the political circles in Germany. Opposition to this plan was pounced upon as an issue by the conservatives in Germany and they were the most outspoken with regards to it. A coalition of groups was formed with Alfred Hugenberg as a leader. Bringing about the renouncement of the reparations through a Liberty law was the aim of this group. Eventually it remained in effect till July 1931 and it was abolished in 1932.

That is all, about the Young Plan and its implications on Germany and the whole world post World War 1. This plan is what seems to have the roots of the Third Reich or the Nazi Germany which took Europe by storm. I close my treatise on this plan at this juncture! Till next time, adios!